Judge Lynne M. Hobbs, Case Number: 23STCV26924, Date: 2024-07-02 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 23STCV26924, Date: 2024-07-02 Tentative Ruling

Case Number: 23STCV26924 Hearing Date: July 2, 2024 Dept: 61

SEROJ HAKOPIAN, et al. vs GLENDALE K, INC.

TENTATIVE

Defendant Glendale K, Inc.’s Motion to Compel Arbitration is GRANTED as to Plaintiff Seroj Hakopian’s individual wage-and-hour claims. Plaintiff’s PAGA claims are STAYED pending the arbitration.

Defendants to provide notice.

DISCUSSION

I. OBJECTIONS

Plaintiff objects to the declaration of Pamela Metlicki submitted in support of Defendant’s motion to compel arbitration. Objection No. 4, concerning the manner of the agreement’s presentation to Plaintiff, is SUSTAINED, as Metlicki lacks personal knowledge. Objections No. 5 and 6, concerning the existence of any record of Plaintiff’s questions concerning the arbitration agreement, are OVERRULED. Plaintiff’s objections to Metlicki’s testimony concerning Defendant’s engagement in interstate commerce need not be ruled upon, as they are not material to the resolution of this motion.

II. MOTION TO COMPEL ARBITRATION

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court's discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Defendant Glendale K, Inc. (Defendant) moves to compel arbitration of Plaintiff Seroj Hakopian’s (Plaintiff) individual wage-and-hour claims and to stay Plaintiff’s remaining PAGA claim under an arbitration agreement executed by Plaintiff June 27, 2022. (Metlicki Decl. Exh. B.) The arbitration agreement states that the parties agree that they will arbitrate “all disputes arising out of their employment relationship, including without limitation any disputes or claims regarding Employee’s hiring, the validity, interpretation, enforceability or breach of any policies or procedures, any purported employment agreement, any disputes or claims regarding compensation (including but not limited to any claims pertaining to overtime pay, minimum wage, or meal/rest breaks), harassment, discrimination, retaliation, employee benefits, the termination of employment, or any claim whatsoever arising out of your employment with the Company.” (Metlicki Decl. Exh. B.)

At the outset, the parties challenge whether this agreement is governed by the Federal Arbitration Act (FAA) and its allowance for waivers of class and representative actions in arbitration agreements. (Opposition at pp. 1–3.) Although the parties focus on whether Defendant, a car dealership, is factually engaged in interstate commerce, it is unnecessary to reach this question, as the agreement itself states that it “shall be interpreted and construed solely under the Federal Arbitration Act.” (Metlicki Decl. Exh. B.) “The FAA applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement.” (Barrera v. Apple American Group LLC (2023) 95 Cal.App.5th 63, 76.) The FAA thus governs this agreement.

Plaintiff opposes the agreement on the grounds that it is unconscionable. (Opposition at pp. 7–14.) “Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Arbitration contracts presented to employees on a take-it-or-leave-it basis are at least minimally procedurally unconscionable. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113.) The agreement here is one of adhesion presented to Plaintiff by Defendant as a mandatory condition of employment, as indicated by the terms of the employment agreement, which requires an employee’s acknowledgement of consent to the arbitration agreement, and the Metlicki declaration. (Metlicki Decl. ¶¶ 6–8; Exh. A.) The agreement thus possesses a level of procedural unconscionability.

However, Plaintiff identifies no basis for finding the agreement substantively unconscionable. Plaintiff argues that the agreement prohibits Plaintiff from seeking administrative relief. (Opposition at pp. 7–10.) This is not accurate. The agreement expressly exempts Plaintiff’s claims for administrative relief from the arbitration agreement, and includes the statement: “But if you choose to pursue a claim after exhausting administrative remedies through the DFEH and/or EEOC, those claims are subject to this agreement.” (Metlicki Decl. Exh. B, ¶ 2.) Plaintiff does not explain how this language adversely affects their ability to seek administrative relief, but merely cites case authority addressing a different provision that expressly waived an employee’s “right to any remedy or relief as a result of such [administrative] charges or complaints brought by such governmental administrative agencies.” (Opposition at p. 8; Hasty v. American Automobile Assn. etc. (2023) 98 Cal.App.5th 1041, 1060.) No similar provision appears here.

Plaintiff argues that the agreement is unconscionable because it contains a waiver of representative actions. (Opposition at p. 9.) But the authority cited stands only for the proposition that a waiver of unwaivable representative claims — i.e. representative claims brought on behalf of other employees under PAGA — is unconscionable. (See Hasty, supra, 98 Cal.App.5th at p. 1063 [“The ban on all representative Act actions thus remains unconscionable because it requires an employee to waive a right that is not waivable.”].) Here, the agreement expressly exempts PAGA claims from the arbitration agreement. (Metlicki Decl. Exh. B, ¶ 3.)

Plaintiff argues that the agreement fails to designate an arbitration provider. (Opposition at p. 10.) But this too is a mischaracterization of the agreement. The agreement expressly states the manner by which an arbitration demand may be served, then states: “The parties will then discuss selection of an arbitrator and if they cannot agree on an arbitrator, either party may petition the Superior Court to appoint an arbitrator under the CAA [California Arbitration Act].” (Metlicki Decl. Exh. B, ¶ 4.) This is unlike the authority cited by Plaintiff, in which the rules and arbitrator were “concealed” from the employee. (Opposition at p. 10, quoting Murrey v. Superior Court (87 Cal.App.5th 1223 [holding arbitration agreement invalid where employer possessed “the sole authority to designate a preferred DRO [dispute resolution organization]” and ‘to keep the identity of the predesignated RO concealed from [the plaintiff]”.]

Plaintiff argues that the provision designating the location of the arbitration to be “in the county where the Company is located, unless otherwise agreed by the parties.” (Opposition at p. 11.) Plaintiff does not explain why this location is ambiguous, as Plaintiff alleges that the company’s principal place of business and their site of work are located in Los Angeles County. (Complaint ¶ 4.)

Plaintiff argues that the agreement is unconscionable because it does not state that the arbitrator shall be “neutral.” (Opposition at p. 12.) But the agreement does state that the arbitrator shall be chosen by the agreement of the parties and “subject to disqualification on the same grounds as would apply to a California Superior Court judge.” (Metlicki Decl. Exh. B, ¶ 2.)

Plaintiff argues that the agreement does not provide for adequate discovery, because it states that the arbitrator “may allow discovery necessary for a full and fair resolution of any dispute.” (Opposition at p. 12.) But similarly permissive provisions have been upheld, such as those that state the arbitrator “shall have the authority to order such discovery, by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of the arbitration.” (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1475.) Indeed, the only boundary on discovery here is that it is “not to exceed the limits provided by the CCP [Code of Civil Procedure] pertaining to depositions, interrogatories, requests for admission, request to produce documents and things and subpoenas.” (Metlicki Decl. Exh. B, ¶ 2.) Plaintiff argues that this effective incorporation of all discovery available in civil litigation is in fact a limitation, because “[i]f the discovery permitted is to the limits of the CCP, then the discovery permitted by the agreement is not the CCP.” (Opposition at p. 12.) It is unclear what Plaintiff means by this argument, and it furnishes no basis to find the agreement unconscionable.

The arbitration agreement also contains no limitation on the kinds of relief available in the arbitration, and expressly provides for a written award with judicial review — albeit construed as a waiver of the right to appeal “except as required under applicable law to preserve the validity of this agreement, or the award, or as otherwise permitted under the CAA.” (Metlicki Decl. Exh. B, ¶ 2.)

The agreement is not unconscionable, and the motion is therefore GRANTED. Plaintiff’s PAGA claims are stayed pending the completion of the arbitration under Code of Civil Procedure § 1281.4.